Revamped Energy Master Plan Casts Shadow on Solar

Gov. Christie dismisses aggressive renewable energy targets as "pie in the sky," calls for more nuclear and more natural gas power plants.

Credit: Governor's Office/Tim Larsen

Governor Chris Christie and BPU President Lee Solomon.

Gov. Chris Christie yesterday scaled back the state’s renewable energy goals, releasing a revamped Energy Master Plan (EMP) that questions New Jersey’s aggressive targets for solar energy, while pushing for more nuclear power and a bigger dependence on natural gas.

The plan, 14 months in the making, also recommends modifying the state’s goal of reducing energy consumption by 20 percent by 2020. And it suggests that having 30 percent of the state's electricity generated from renewable sources by the end of this decade is not achievable.

In a Statehouse news conference, Christie said the state would re-establish a 22.5 percent renewable energy goal, a target he described as realistic and achievable, not a "pie-in-the-sky sop meant to pander to special interests."

The Republican governor said the 128-page plan would provide a pathway to more affordable energy costs in a state saddled with the fourth-highest electric rates in the country. But how it would do so is unclear because part of the route it suggested is a pilot program to build nearly 2,000 megawatts of new natural gas capacity in New Jersey, a program the plan later acknowledged is hindered by actions taken by federal regulators.

Praised by Business Community

The much anticipated plan was generally praised by the business community, largely because it focused on the high cost of electricity in New Jersey and echoed longstanding concerns about aggressive renewable energy goals and their cost. Administration officials also talked about phasing out the societal benefits charge (SBC), a surcharge that amounts to about $5 a month on a typical resident’s bill, but can run much higher for a business that uses a lot of energy, at times even topping $1 million a year.

The charge, which raised more than a half billion dollars in recent years, is the primary source of funding for many of the state’s clean energy programs, as well as other efforts, including a low-income energy assistance program. Board of Public Utilities (BPU) President Lee Solomon said he would like to replace the surcharge with a revolving loan fund, a move that would eventually shrink the SBC to zero.

"We’re encouraged that the Governor is looking to lower the overall cost of energy," said Sarah Bluhm, a vice president of the New Jersey Business & Industry Association. "As you do so, you have to examine the cost of solar energy."

Undermining the Green Economy

Clean energy advocates uniformly panned the plan, calling it a retreat from New Jersey’s leadership role in developing clean energy programs. Coupled with last week’s decision by Christie to pull out of a regional initiative aimed at reducing greenhouse gas emissions, they predicted it would undermine New Jersey’s efforts to promote a green economy.

"The goals in today’s EMP are another signal, of many, to investors not to invest in clean energy in New Jersey," said Michael Pisauro, legislative agent for the New Jersey Environmental Lobby.

"It’s an attack on renewable energy and a clean energy economy," said Dennis Wilson, president of the Mid-Atlantic Solar Energy Industries Association, a trade group representing smaller solar businesses, which some say could be hit hardest by a shift in the state’s solar policies.

Probably the biggest fight will revolve around New Jersey’s fast-growing solar industry. Second only to California's, it features more than 9,000 solar installations and creates thousands of new jobs. Buoyed by state incentives and federal tax credits, it has become a lucrative investment vehicle for many, including Wall Street, a fact that the plan obliquely mentions.

"Going forward, emphasis should be place on the development of renewable energy resources that confer economic benefits to New Jersey, oriented around a reduction of emissions, reduced or stabilized energy prices, and creation of jobs…." the report said.

The plan details the high cost of solar at length, noting the price of solar renewable energy certificates (SRECs), which are earned by owners of solar systems for the electricity they produce, will total more than $525 million in 2015 alone. Industry experts said that figure was a gross exaggeration, indicating SRECs would likely run at most to $200 million. The plan suggests the legislature should revisit a bill it passed in the final days of the Corzine administration, which establishes even more aggressive solar goals.

Under the plan, the state would focus most of its efforts in developing solar projects on larger commercial and industrial sites or brownfields and abandoned garbage dumps, a shift that likely would make it harder for smaller solar firms to do less ambitious installations on residential sites. That would occur because the larger projects would siphon most of the available solar renewable certificates available in any given year, but the plan says this would lower the overall costs of solar projects.

In addition, the plan suggests that future solar energy projects undergo a cost-benefit analysis, similar to what the administration has recommended for offshore wind projects. To that end, the plan urged the analysis include a perspective from both participants in the renewable energy program and non-participants.

That recommendation reflects a recurring criticism of the solar incentive program. Low- and moderate-income ratepayers subsidize the cost of installing solar systems for more wealthy ratepayers who could afford the initial capital costs of paying for the systems, which ended up lowering their energy costs.

Although the Governor and other administration officials said the plan would lead to more affordable energy costs, the plan, at one point, contradicts that claim. "Wholesale electricity prices are expected to increase somewhat over the next decade," the plan said.

Conflicting Accounts

The conflicting accounts led some to question the plan's usefulness. "I find it vague and short on specifics on many issues," said Paul Patterson, an energy analyst for Glenrock Associates, who has followed the issue in New Jersey. "I don’t have a clear picture where energy policy is heading in New Jersey after reading this."

While the plan does suggest that a goal of having 70 percent of New Jersey’s electricity produced by "clean" energy by 2050 is achievable, its definition of "clean’" made some environmentalists unhappy. That category includes natural gas-fired plants, a fossil fuel that produces greenhouse gases, although much less than coal, and nuclear power, which produces no greenhouse gas emissions.

While not endorsing any specific project, Christie said nuclear has to be a part of the state’s overall plan to increase reliability and reduce greenhouse gas emissions.

The plan also suggests the state take another look at developing more combined heat and power (CHP) plants, facilities that generate electricity and steam to cool and heat buildings simultaneously, as well as energy-from-waste plants, which burn industrial and municipal trash, generating electricity in the process.

Christie said the state also needs to step up its efforts to reduce energy consumption through energy efficiency projects, particularly at state government buildings, but the plan offered few specifics beyond that. "There’s no clear sense of an energy efficiency strategy in this plan," said Matt Elliott, clean energy advocate for Environment New Jersey.

Jeff Tittel, director of the New Jersey Sierra Club and a daily critic of the governor who sometimes fires off two press releases a day attacking his policies, was blunter.

"What this governor has done is taken one of the most advanced clean energy programs in the country and gutted it," he said.

Even Dave Pringle, campaign director of the New Jersey Environmental Federation and one of the Governor’s biggest boosters on the environmental front, expressed unhappiness. "I was expecting the good, the bad and the ugly, and so far, I have only seen the ugly," he said.